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Bankers Are Creating a Slot Machine with Our Money
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The nation’s financial markets were a disaster waiting to happen, and the recent crash has given progressives the perfect opportunity to create a more fair and prosperous economy, says a leading author.
Les Leopold, author of The Looting of America, says the nation’s economic disaster was caused by a financial crash that has been brewing for 30 years. It began when policymakers created a trifecta of deregulated financial markets, tax codes that favored the rich and new trade rules.
[These policies] were supposed to lift all boats; instead, we got a gigantic bubble which burst.
Leopold, executive director of two nonprofit educational organizations—the Labor Institute and Public Health Institute—spoke last night at the National Labor College (NLC) in Silver Spring, Md.
Over the past three decades, Leopold says, real wages dropped for working people while the super rich prospered under the new policies. In 2006, for example, the top 0.1 percent of the nation—about 130,000 people—had as much income as the bottom 50 percent—some 64 million people. From an economic perspective, he says, if you let income get that skewed, you’re going to have a financial crash.
That’s what happened in 1929 before the Great Depression and again in 2008, he says. So much money poured into the hands of the rich that it created a demand for new ways to invest, and Wall Street responded with a series of shaky financial packages.
It was like we gave Wall Street the keys to the car and watched them crash it right in front of us.
Any financial reform must consider that putting so much money in the hands of so few is a recipe for disaster, Leopold says.
It’s like drugs. You can regulate the supply, but if you don’t cut the demand (so much money in the hands of the rich), nothing will change. Wall Street will simply come up with new schemes.
The test for whether a proposed solution to the financial crisis should simply be whether it is moving money out of Wall Street to the real economy and from the top of the economic scale to the bottom, Leopold says.
Progressives should be fighting for sweeping changes to narrow the wage gap. While unions have been sounding the alarm for decades about the growing inequality, most people ignored it, he says. The union agenda of raising the minimum wage, increasing tax levies on corporations and the super-rich and passing the Employee Free Choice Act are all key policies that will help restore balance to the economy, he adds.
Leopold also called for wage caps across the board on Wall Street and a new tax on financial transactions.
The financial reform policies being pushed by the Obama administration and Congress are filled with “incredible rhetoric, but with weak knees,” Leopold says.
The $13 trillion bailout of the financial markets has put all of Wall Street “on welfare,” and now is the time for progressives to push hard for real change. But progressives are letting the banking industry and others get away with framing the debate on reform, Leopold says.
He points to the notion among many in Congress that reforms should not hinder the financial market’s ability to innovate.
[Financial innovation] is a lot of bunk. They’re just creating a better casino game. We have to be very cautious. [The bankers] are not creating an iPod; they’re creating a slot machine with our money.
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3 Comments
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Let’s be clear. The bankers run this society along with Wall Street and the major manufacturers. This is their government and laws are passed and enforced to protect their interests AND profits. Witness J.P. Morgan’s huge profits this quarter on OUR dime.
To contiually expect their government to restrict their greed for profits without a concerted struggle in the streets by labor and their allies is folly and serves on the interests of those “leaders” who wish to maintain the staus quo, at OUR expense, at all costs.
Break from the Democrats and Republicans and struggle to build a workers party that will fight to build a workers government then we can begin to have security and a future.
Remember the 99%!
The 99% are the people who vote and have the least amount of income left after paying taxes. When they begin to look into the way politicians, “leaders,” and everyone else in a position of any kind of authority do business, they can usually figure out that almost everything pertaining to money is done so the 1% will benefit more and more – and that those benefits are usually given at some cost to the 99%.
The 1% usually don’t care about you or anyone else in the 99%. Wall Street bankers (which are not your local main-street kind of bankers) and the entire financial industry are in bed with each other. They are being given government subsidies in the form of FDIC insurance, in the form of tax write-offs for nearly every business expense you could imagine, in the form of slim-to-none taxation of profits due to loopholes that have been created by another part of the 1% (aka as State, and Federal legislators), and (most recently) through bailouts approved by those very same legislators.
I don’t want to be “rich.” I don’t need or have any inclination to own a $25,000 umbrella stand or a yacht or a 16-room house for only my spouse and me. But then, I don’t like to see other examples of what used to be called “conspicuous consumption.” The jerk who put that umbrella stand in his multi-million-dollar hallway probably never thought of donating to a food bank or adding one more low-paid employee to the company he was draining.
There are exceptions, of course; but we need to advance the situation of the 99% in this country, and if that costs some profits or a little more tax for the 1%, I say that’s okay by me.
Oh, by the way … 30 years ago, those people who started that trifecta were working under the “trickle-down” theory, not the “rising-tide” theory. I’m not sure either is a great theory, but I do know that I’d rather be in a dry boat than being “trickled-down” on – wherever the trickle is coming from.